Goldman to Expand Small-Business Program

In the last five years, officials from Goldman Sachs have been familiar faces on Capitol Hill, frequently defending the firm’s actions in the years leading up to the financial crisis. But on Thursday, the investment firm used a friendly hearing as an opportunity to go on offense: testifying before a Republican-led House committee, Goldman Sachs’s director of corporate engagement, Dina Powell, announced that her organization was expanding 10,000 Small Businesses, its program to assist entrepreneurs.

lt is an intensive educational experience — about 80 hours of coursework through a local community college, plus homework — as well a loan program administered through nonprofit community lenders. Currently, the 10,000 Small Businesses program is available to carefully chosen small-business owners in nine metropolitan areas. Loans are also available to rural borrowers in six other states. Beginning next year, however, Goldman will run a version of the educational program open to business owners anywhere in the country.

“In just three years, we have invested in the infrastructure, we’ve validated the model and launched the program in 15 markets,” said Ms. Powell in an interview after the hearing. “We wanted to create a model that would allow us to invite businesses from all around the country that qualify to apply for the program.” In its first round, the national program will fly 100 entrepreneurs to Boston twice — for two intensive four-day sessions at Babson College, which designed the 10,000 Small Businesses curriculum. Between those sessions, students will do about eight hours of remote work a week over 10 weeks.

The ideal candidate for the program, Ms. Powell said, is a company in business for two years, with at least four employees and $150,000 to $4 million in annual revenue. “It’s a business that has a good solid business record and the owner has a proven track record of hard work and passion,” Ms. Powell said. “And they have to have a desire to grow the business.”

The setting for the announcement was a House Small Business Committee hearing meant “to show that private sector entrepreneurship education programs work extremely well,” as D.J. Jordan, a committee spokesman, put it. According to Ms. Powell’s written testimony, 10,000 Small Businesses would certainly fit the bill.

The educational program “maintains a 99 percent graduation rate, and just six months after graduation, 63 percent have reported increasing their revenues and 47 percent have reported creating net new jobs,” she said in her written statement. “In addition, approximately $56 million has been funded to over 265 businesses for growth capital, of which 75 percent are located in low- and moderate-income levels, and 50 percent are women/minority business enterprises.”

Moreover, she said, the program has created a powerful small-business network. About three-quarters of the students end up forming some kind of business partnership with each other after graduating.

But if the implicit purpose of the hearing was to suggest that private entrepreneurial development programs could substitute for government-sponsored efforts, then 10,000 Small Businesses makes a less convincing case. For one thing, in its three years, the program has had room for only 1,400 entrepreneurs. In this case, the program’s name is not figurative: with its $500 million budget, Goldman estimates that 10,000 Small Businesses eventually will be able to help … 10,000 small businesses.

By contrast, in 2012, the two leading government-funded entrepreneurial assistance networks, Score and small-business development centers, counseled more than a half-million small businesses. In all, there are about six million employer businesses in the United States.

“It is important for both the public and private sectors to be focused on this issue,” Ms. Powell said in the interview. But she defended the program’s narrow reach. “We have a track record on these programs,” she said. “And if you want to have real growth, you need to invest in the high-quality program that focuses on output more than anything else.”

She said Goldman was creating a lasting foundation for entrepreneurial training that would continue once its initial half-billion dollar commitment was exhausted. “We are building entrepreneurship centers at community colleges around the country,” she continued. “We’ve trained 200 community college professors. We’re investing in the capacity of community development financial institutions, which means more loan officers, and building their balance sheets so they can make more loans.

“This is really the legacy of 10,000 Small Businesses.”

We’d like to hear from small-business owners who were schooled by Goldman Sachs. If you’re one of them, comment below or please drop us a line.

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